Qualified Charitable Distributions
Qualified Charitable Distributions (QCDs) allow donors who are at least 70.5 years old to give money directly from their IRA to charities without it counting as taxable income.
Without access to deductions for itemized donations, more and more people are noticing the benefits of tax-free QCDs.
The donated money counts toward the required minimum distribution, the amount IRA holders must withdraw annually from their account starting at a certain age.
How Does It Work?
Seventy-eight-year-old Pauline has $500,000 in her IRA. She’s required by law to take out $24,600 this year, but she doesn’t need that much and she’s dreading the thought of paying the tax. Pauline is a big supporter of Children’s Friend and has been thinking of making a substantial gift for some time. Pauline has a great idea to make that gift, meet her minimum distribution for the year, and save herself from some of the tax liability.
Pauline directs the administrator of her IRA to $20,000 to Children’s Friend, and $5,000 to herself. The $20,000 gift to Children’s Friend counts toward her required annual distribution, and she doesn’t have to pay taxes on the gift.*
*QDCs are not eligible for a charitable tax deduction. Please consult your tax advisor for more information about how you can personally benefit from QDCs.
The legal designation for Children’s Friend is Children’s Friend and Service for planned giving purposes.
Children’s Friend is a 501(c)3 tax-exempt non-profit organization under Federal Tax ID number 05-025-8819
For more information about how to support Children’s Friend with a QCD, please contact our Chief of Philanthropy,
Pamela Verklan at pverklan@cfsri.org or 401.276.4306.